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1.Trade and Environment at the OECD
Since 2008, the trade and environment context has changed significantly. The global economy has lived through a major financial and economic crisis, which has left lasting and far-ranging repercussions across OECD and non-OECD countries. The world economy has slowly recovered, but trade growth has still not regained its momentum. Between 2011 and 2019, the real rate of growth of trade hovered around that of global GDP, around 3% or less. Several possible explanations for this slowing in trade growth have been suggested, among them cyclical factors, such as weaker demand, especially for more trade-sensitive durable and investment goods. Limited corporate investment and reduced trade financing in the aftermath of the crisis no doubt also came into play. Evidence is mixed as to the role of structural factors such as limits being reached to the fragmentation of production and to international specialisation, especially as global value chains are still expanding in terms of both product and country coverage.
The period since 2008 has also seen multiple threats to the global environment being brought into sharp focus. Evidence of and concern about the climate crisis has grown worldwide. Furthermore, long-standing scientific concern about the deterioration of marine and terrestrial ecosystems and biodiversity has moved into the public eye and moved up policy agendas.
These developments have revealed the shortcomings of existing policy responses, as well as the need for more ambitious strategies that are both sustainable and inclusive. They have also increased pressure on policymakers to reconcile essential economic and environmental priorities, for instance through resource efficiency and circular economies. They have also infused a new sense of urgency in international fora to promote collective action, in the context of an increasingly integrated global economy.
Though change in some areas has been slow, international governance for both trade issues and environment issues actively responded to the challenges of the last decade. On the environment side, there have been key developments around multilateral environmental frameworks such as the Sustainable Development Goals (SDGs) and the Paris Climate Agreement, among other notable initiatives. Such high-profile multilateral approaches came to dominate the environmental agenda and influence decisions across other policy areas, including trade. For instance, many of the 17 SDGs and the associated 169 targets involve long-standing trade-related issues, such as the reform of government support for fisheries or fossil fuels, providing much needed impetus to reboot sometimes flagging initiatives to reconcile trade and environmental objectives. They have also propelled work on the environment and trade nexus into new areas, such as trade and the circular economy transition. On the trade side, there has been a step-down in some expectations, with limited progress in multilateral trade negotiations. However, opportunities to advance on environmental provisions contained in RTAs have been remarkable, and there have been some notable plurilateral initiatives relevant to the trade and environment nexus, notably concerning trade in environmental goods.
The environmental and trade context has made many long-standing OECD recommendations seem all the more pressing and heightened the relevance of multilateral initiatives and co-operation promoted by the OECD since the creation of the JWPTE. Since 2008, the trade and environment debate has noticeably matured, the range of issues under discussion has expanded considerably and their relevance is better understood. Public and private stakeholder engagement and expertise have grown, along with awareness of the importance of policies at the trade and environment nexus. There is now little dispute that international trade flows, rules and policies are directly and deeply relevant to environmental performance, and that meeting environmental objectives require supportive trade policies.
